In terms of the overall market, auction results were once again strong last weekend, with researcher RP Data reporting high clearance rates around the country. 82% of properties were sold under the hammer in Melbourne, while Sydney had a clearance rate of 71%. Brisbane sat at 40%, Canberra 81%, Perth 63%, Adelaide 62% and Tasmania was unable to report an average with very low volumes.

Smart Company said that the auction results are sparking fears of prices overheating. The sentiment was echoed in an article by the Australian newspaper which said outer Melbourne’s surging house prices are at risk of a correction, mirroring the boom-and-bust scenario that hit Sydney’s outer suburbs between 2003 and 2005.

A Fairfax article reported housing affordability had crashed in the final three months of 2009, according to an index compiled by the Housing Industry Association and Commonwealth Bank. The report said increasing interest rates and demand from international investors is set to continue the decline in affordability in coming months.

Meanwhile, homebuyers and investors have nearly doubled their borrowings over the past five years, according to the latest Reserve Bank (RBA) figures. A News Ltd article said there is concern the pace of borrowing is exceeding household income growth, with housing debt currently 135% of disposable income; 20 years ago it was just 45%.

With rates rising this week, the landscape of the property market is as difficult as ever to predict. We encourage you to consider carefully any activity around your property.